Correlation.

Price Demand Supply Income Expenditure

etc.

The statistics Technique that studies

the degree of relationships is called
the technique of correlation.
 According to Croxton and Cowden .

• “When the relationship is of a quantitative

nature, the appropriate statistics tool for
discovering and measuring the relationship
and expressing it in a brief formula is known
as correlation.”
 Types of Correlation.

Supply
1. Positive

Supply
Price
Price
correlation

When two variables move in the same direction, that is, when one
increases the other also increases the other also increases and
when one decreases the other also decreases , then it is called
Positive correlation.

Price(in Rs) 20 22 24
Supply(in kgs) 100 110 120
 2. Negative Correlation.

Demand

Demand
Price

Price
When two variables change in different directions, then
it is called Negative Correlation.

Price (in Rs) 20 22 24

Quantity demanded(in kgs) 100 90 80
 3. Linear
correlation

10%
10%
10%

10%
Linear Positive Linear Negative

When two variables change in a constant proportion , it is called linear

correlation .If the two sets of data bearing fixed proportion to each other are
shown on a graph paper , this relationship will be indicated by a straight line. It is
also known as perfect correlation.
Example=(1) 10% rise in price of product results in 10% fall in its demand is
linear negative correlation.
(2) 10% rise in price of product results in 10% rise in the supply of product is
linear positive correlation.
 4. Non-linear correlation.

> 10%

< 10%
10%
10%

> 10%

< 10%
Non- Linear Positive correlation Non- Linear Negative Correlation

When the two variables do not change in any constant

proportion, the relationship is said to be non-linear. Such a
relationship does not form a straight line relationship.
Example= (1) 10% rise in price of product results in 12%
fall in its demand is non-linear negative correlation .
(2) 10% rise in price of product results in 8% rise in the
supply of product , is non- linear positive correlation.
 5. Simple Price and Demand
correlation
Price and Supply

Simple correlation implies the study of relationship

between two variables only. Example = *Relation
between price and demand
Or
*Relationship between Price and supply.
 (6) Multiple correlation.

Income , Saving , Investment ,

Production etc.

• When the relationship among three or more than three

variables is studied simultaneously, it is called multiple
correlation .in case of such correlation the entire set of
independent and dependent variable is simultaneously studied.
Example= Relation between income , saving and investment.
 Degrees of Correlation
Degree Positive Negative
Perfect +1 +1
High Between+0.75and +1 Between-0.75and-1
Moderate Between+0.25and -0.75 Between-0.25and- 0.75
Low Between 0 and +0.25 Between 0 and -0.25
Zero ( Absence of 0 0
Correlation)
 Importance .

(1) Formation of (2) Cause and effect

laws and concepts. Relationship:
The study of Correlation
correlation shows coefficient
the direction and sometimes suggests
degree of cause and effect
relationship between relationship
the variables. between different
variables.
(3) Business (4) Policy
decisions:
Correlation analysis formulation:
facilities business Correlation analysis
decisions because also helps policy
the trend path of formulation .if the
one variable may government finds a
suggest the negative correlation
expected change in between tax rate and
the other. tax collection,
 Q. Calculation the coefficient of correlation between the height of father and his son for the following data.

Height of 165 166 167 168 167 169 170 172

father ( CM)

Height of 167 168 165 172 168 172 169 171

Son ( cm)

= + 0.6029
Q.Given below are test scores of two groups. find the correlation
coefficient?
X- 100 106 112 98 98 87 77 67 66 49
value
Y- 28 33 26 27 27 24 24 21 26 22
value

=0.7166
 Q. 2 judges mark the performance given by 7 contestants in a talent competition.

Contest A B C D E F G
ant
Judge 1 14 17 12 9 15 10 11
Judge 2 10 9 13 14 8 15 12

= 0.89
Q. Calculate ‘R’ of 6 students from the following data.

Marks in 40 42 45 35 36 39
State
Marks in 46 43 44 39 40 43
eng.

= 0.771
 Q. Calculate the coefficient of correlation for the following data by the different
Methods. ( Ans= 1)

X 12 15 18 21 24 27 30
Y 6 8 10 12 14 16 18

Q. Calculate the coefficient of correlation for the following data by

all the Methods. (Ans=
1)X 12 15 18 21 24 27 30
Y 6 8 10 12 14 16 18

Q. The following table shows the heights of a sample of 10 father and their
eldest sons. (Ans= 0.76)
Height of
father
170 167 162 163 167 166 169 171 164 165

Height of
son
168 167 166 166 168 165 168 170 165 168
Q. Calculate the coefficient of correlation for the following data: (Ans= 0.976)
Husband’
s age
30 32 34 35 37 38 40 42 44
Wife’s
age
22 25 27 28 29 30 31 32 33
Q. Calculate the coefficient of correlation for the following data by the
different methods. ( Ans= 1)

X 2 4 6 8 10 12
Y 6 12 18 24 30 36
Q. Calculate the coefficient of correlation between the heights of fathers in
inches (X) and their sons(Y). ( Ans= 0.4375)
X 65 66 57 67 68 69 70 72
Y 67 56 65 68 72 72 69 71
 Q. Calculate the correlation coefficient between X and Y and comment on
their relationship. ( Ans= 1)
X 1 3 4 5 7 8
Y 2 6 8 10 14 16

Q. Find the coefficient of correlation between X and Y series from the data.
( Ans= - 0.178)

X 10 12 8 15 20 25 40
Y 15 10 6 25 16 12 8

Q. The data on price and quantity purchased relating to a commodity for 10

months are given below.
Calculate coefficient of correlation between price and quantity. ( Ans = - 0.958)

Price 10 14 12 11 9 7 15 16 18 20
quantity 25 20 30 32 35 40 19 16 12 10
 Q.From the following data, calculate coefficient correlation between the variable
X and Y using Karl Pearson’s method. ( Ans= 0.896 )

X 10 6 9 10 12 13 11 9
Y 9 4 6 9 11 13 8 4

Q. Calculate coefficient of correlation for the ages of husband and wife. ( Ans= 0.9925 )

Age of 24 25 22 30 34 37
husband
Age of wife 20 21 18 26 28 30

Q. Find out the correlation between the marks in statistics and marks in Accountancy.
( Ans = 0.76)
No of
students
1 2 3 4 5 6 7 8 9 10
Marks in
Statistics
20 35 15 40 10 35 30 25 45 30
Marks in
accounta
25 30 20 35 20 25 25 35 35 30
ncy
 Q .Find Karl Pearson’s coefficient of correlation between the values of X and Y
given data. ( Ans= 0.66)

X 128 129 130 140 132 135 125 130 132 135
Y 80 89 90 95 96 94 80 100 96 100

Q. Calculate coefficient of correlation from the following data. ( Ans= 0.83)

Height
of
66 68 69 72 65 59 62 67 61 71
fathers
Height
of sons
65 64 67 69 64 60 59 68 60 64